US splits from Canada, Mexico on impact of NAFTA after 23 years

U.S. Trade Representative Robert Lighthizer speaks during a news conference, Wednesday, Aug. 16, 2017, at the start of NAFTA renegotiations in Washington. (AP Photo/Jacquelyn Martin)

U.S. Trade Representative Robert Lighthizer on Wednesday declared at the opening talks to renegotiate the North American Free Trade Agreement that "this agreement has failed" for many Americans, and that the U.S. was seeking fundamental reforms.

But Lighthizer's Mexican and Canadian counterparts disagreed, and said the deal had been a huge success for everyone and that any changes should be therefore be modest lest those gains be lost.

The sharply contrasting assessments of NAFTA's impact over the last 23 years highlighted the difficulties Lighthizer and the Trump administration will face in the renegotiations, the first round of which which began Wednesday in Washington and will continue through Sunday. Canada and Mexico have little apparent interest in the more wide-ranging reforms the administration is seeking.

Lighthizer claimed that "at least 700,000 American have lost their jobs due to changing trade flows caused by NAFTA" and said many experts believe the number may be even higher. He stressed that President Trump was "not interested in a mere tweaking or updating of a few provisions of the trade deal."

Mexican Secretary of the Economy Ildefonso Villarreal by contrast said that "NAFTA has been a strong success for all parties" and that the goal of the talks should be "not tearing apart what has worked, but rather how we make our agreement better." He quoted Lighthizer, who said this year, "Our objective is to, first of all, do no harm."

Canadian Foreign Minister Chrystia Freeland said that, "Our trade with the U.S. is balanced and mutually beneficial." She noted that the U.S. had an $8.1 billion trade surplus with her country.

President Trump is a long-time critic of NAFTA who argued that the United States' trading partners have gotten the better of the deal. The president has often cited the U.S. trade deficit with Mexico, currently at $57 billion, as proof. Lighthizer has also said the administration would focus on eliminating "unfair subsidies," a thinly-veiled reference to Canadian dairy, poultry, and timber policies, among other goals.

U.S. industries, especially dairy and poultry, have long sought the end of Canada's trade restrictions on both of those products. Domestic timber industries have also complained that Canada's policies unfairly benefit its loggers too.

The failed Trans-Pacific Partnership trade deal would have expanded U.S. access to those markets without completely removing the barriers. The TPP deal is widely expected to be a blueprint for the NAFTA renegotiations.

In his opening statement, Lighthizer stressed that NAFTA, which was signed in 1993, was a quarter-century old and had not kept up with changes in the economy. He said that the U.S. was not interested in throwing the deal out, noting that for many American farmers, Canada and Mexico are their best customers. But he said the U.S. would seek to level the playing field in other areas.

"We need to assure that huge trade deficits do not continue and that we have balance and reciprocity," he said in his opening statement. "This should be periodically reviewed. Rules of origin, particularly on autos and auto parts, must require higher NAFTA content and substantial U.S. content. Country of origin should be verified, not 'deemed.' Labor provisions should be included in the agreement and be as strong as possible."

"The agreement should have effective provisions to guard against currency manipulation," he added. "The dispute settlement provisions should be designed to respect our national sovereignty and our democratic processes. We should include provisions to guard against market-distorting practices of other countries, including third-party dumping and state-owned enterprises. We should assure that there is equal access and reciprocity in government procurement and agriculture."